tv The David Rubenstein Show Peer to Peer Conversations Bloomberg January 12, 2018 6:00pm-6:30pm EST
♪ >> what was the strategy that you used. >> i was determined to recapture my parents money that i lost. >> how do somebody raise $5 billion question mark you have an image of being a person that strikes fear in a lot of ceos, some people afraid that they will get a call from paul singer. ,> if some of the investigated what rate of return with a have compounded? >> people without recognize me, was livid this way.
-- let's leave it this way. >> i don't consider myself a journalist. nobody else would consider myself a journalist. i began to take on the lip of being an interview even though i have a day job robert -- running a private equity firm. >> how you define leadership ?uestio what is it the next summary tic? >> i read the other day that you you raise $5 billion in 24 hours. >> it was true was the offering was open because it was first come first serve, there was a lot of demand and 23 hours iter, it was filled up but took a number of months of preparation.
david: that make me feel better that it was not just 24 hours. you study your fun in what you're -- year? >> 1977. i had $1.3 million. >> when did you get that from? >> it was friends and family, i was a practicing lawyer in the early 1977, i decided that what ahave been doing, managing tiny amount of friends and family money was much more interesting than practicing law. >> you grew up in new jersey and manhattan and you went to the university of rochester and harvard law school. >> it was a wonderful daunting experience because i didn't exactly like what i was doing. >> you went to practice law in new york in the absence of a better idea. >> i practice law in new york as well. i practice law in washington so
when i give up the practice of law to go into business. my mother said you went to law school, what are you going to do? whendid your mother say you said you were going to give up the practice of law. >> continue living? >> you work out of your apartment and you have 1.5 million dollars from friends and family, what was the strategy that you used to get off the ground? >> a tiny bit of context, my dad was a breach of pharmacist and after i started attending law school he said you have to learn have to be an investor and he and i traded tiny amounts of text docs and mining stocks of this, $5,000 of this so i became very interested in markets and in trading and in the. throughfrom 1967 and 68
1974, he and i found just about every possible way conceivable to lose money. this in 9077,ted i was determined to engage in a trading strategy that made money all the time so for the first 10 primarieso, the strategy was the bond hedging. strong, positive carry, some trading profits, it did the job, the job meaning a consistent return making more money all the time. >> when did you realize that you were better than the average guy? >> i never thought of it that way, i was covertly determined ,o just make a rate of return really recapturing my parents money that i had lost previously
and keep finding ways to pursue that goal of absolute return at a time when convertibles were becoming more quantified, more leveraged and more competitive. >> the core of what you do, do you call it a macro fund or a value fund? what would you describe your investment technique? call whatople would we do multi-strategy, others call it absolute return. the idea of our portfolio mix is to try to make money as close as possible to all the time. but we have done all the years itpursuit of that goal became uninteresting, we added other ways of generating absolute return to the mix, for i came to feel -- part of this was because of my experience as a lawyer, manual
wasvities trading the risk a good way to add value and also control risks, this was the securities that became our largest capital deployment and that is why equity activism has to capital important deployment. there is a couple that are really well known, let me talk about one that is really famous. some bonds from argentina, you may remember this and you held onto it for a long time and pursued it in the cards until you could openly reached a settlement for your investments, was it hard to hold on that long? on inwas not hard to hold a portfolio sense because at no time until the current
inernment came into office december of 2015, at the time before that did the previous two governments negotiate with us. so sometimes, the stubbornness or motivations of your adversary cause you to not able to make a deal and as the claims mount up, it becomes potentially a larger recovery. >> and made a little public, going to something else during this long. of time. >> no. even when it got some press, it was not an easy situation, it was not only the 14 or 15 years of holding this thing, it was contentious. >> you didn't worry that somebody was going to physically attack you from argentina? >> this is the place talk about
security arrangement but it was a contentious situation. >> if somebody invested in the very beginning and he or she kept their money from the very beginning, what kind of a rate of return with a have compounded over 40 years? >> my mother did that. she is waiting for the call next year and i assume she is proud of you. >> yes, she is. from the beginning, a 13.5% net compound rate of return, he $165. there are some investors that had stated basically all the time. quasar a 40 year. of time, you've compounded at 13 point -- 13.5%. that is pretty good so they're too late to invest retroactively for that. , a have an image thing
person that strikes fear in love the ceos, you must recognize that some people are going to get a call from paul singer. >> it could when a corporate executive, this is with the understanding that we are real, we have the capacity to carry through on the project we undertake and we need to be convinced. ♪
strategies is on correlation, element toonderful an absolute return seeking portfolio because if you're doing something that has a and return, even if it is volatile, even if it is binary, make a lot and lose a lot, and it had a return which doesn't have anything to do with the course of the stock or bond markets or anything else in your portfolio, that is an elegant part of the next. -- mix. >> say you call up or some because of the ceo and says this is a way you can improve your company and they said that is a good idea, i wish i had thought of that. >> the way you are asking the thation, it presupposes the response of the company is always anger or hiding under the desks or some combination. >> that is wrong?
>> know, sometimes you are knocking on an open door, myself and our style is doing the work as thoroughly as we can to develop a thesis and assess aether we think there is series of actions that can eliminate underperformance or familiar in a situation and then contacting a company privately, testing with consultants for testing her ideas and try to generate dialogue. sometimes you probably think you are knocking on an open door, sometimes there is a founding -- founder or a management team .hat is ready to scale out they feel they are deserting their staff or employees, there is a lot of different reasons
that a company that is ready for some kind of reformation or new -- a resolution that can maximize value. >> how many can maximize your firm? >> is that 120. i have a chief investment officer and his name is tom pollock and he has been with me since 1989. in a. of time, we more than just complain each other sentences, the founding impulse of the hedge fund idea is independent of thinking. it is the opposite of investing by committee and the earliest hedge fund people were by themselves, they were privateers of the world investment oceans, i never thought that the craft would be susceptible to an
organizational approach. a team approach. i never actually really thought i would be able to be a good manager or team leader the way that -- the works, it is a layer process in which we attempt to train people to accept responsibility and deliver trustworthy insights, inputs to have done the work or to commission of the work but john everyenerally approve meaningful position. we have deep discussions on large positions. david: you have an image of being a person that strikes fear in the heart of ceos. thatthe image bother you you have an image of being a tough person and commanding? >> what i have learned over the years is to not care too much
unfair press. it is good when a corporate executive listens with the understanding that we are real, we have the capacity to carry through and a history of carrying through on the projects that we undertake and that we need to be convinced in order to ok, sorry, sometimes we do. sorry, we were wrong for doing a great job so it doesn't bother me anymore. >> how do you see the economy? >> i'm very concerned about where we are in terms of the financial system, the american economy, the global economy. after nine years of what i consider to be distorted policies, completely oriented toward what i regard as monetary extremism combined with what i consider to be gross suppressing
of fiscal policies, regulatory tax. i think it has created a distorted recovery, it has been partially responsible for this augmentation exacerbation of inequality that has caused a combination of that and the incomplete recovery has caused this middle-class stress and edginess around the world which political fringe parties and french thoughts populism so after nine years of this artificial limitation on the part of financial assets, high-end real estate, art, the things that rich people by, what a globaloday is financial system that is just about as leveraged and in many cases more leveraged than before
2008 and so i don't financial system is more sound and i don't think that the fixes that have been put into place have actually created a sound financial system so i don't believe that competence is justified in policy majors and central bankers and the fact that competence has not been is obvious.l now but if and when competence is lost, i think it could be lost in a very abrupt fashion, causing conceivably a ruckus in the bond market, stock markets and in the financial sector. >> you have given a lot of money and make a lot of money. >> their problem is that they are subject to all kinds of forces, all kinds of pressures coming from 360 degrees on their
>> in the political will, europe and well-known and your political party. who is your favorite candidate does -- this last election question ma? of 2015r said for most and then i supported marco rubio. i stood aside. ultimately, when donald trump was the nominee of the party, did you support him then? >> i voted for him. i was not going to vote for hillary clinton as some of my ipublican friends did and became optimistic about some of the opportunities in economic reform,nd regulatory
tax reform. >> has donald trump invited you got to visit him? i did not know him. >> i invested in his buzz a couple of times. >> high-grade bonds? on the date of issue. >> they later became high-yield? >> and below. >> have you seen him since he is president and have you given any advice? >> i visited the white house wants a few months ago and we chatted a bit about taxes and economic policy. >> you have given a lot of money and raised a lot of money. >> that is on the way it goes, their problem, let's be humanists, their problem is that
they are subject to all kinds of forces, all kinds of pressures coming from 360 degrees on their compasses. so the right policies and the necessarilyre not -- many of them listen and many of them are smart but they're not necessarily things that make the final cut but i think it is --ortant for citizens to inform citizens to give assistance, we are among republican activists that can in a relatively i'm conflicted level, we have less parochial interests in the things that we talked to policymakers about than most people. fair amountmade a of money and yet been very involved in philanthropy. one of the areas you have been involved with his human rights,
what propelled you to get involved in human rights and marriage equality issues? to collectively -- philanthropy the same spirit of activism of trying to get involved and make a difference and make an impact, create things, not just write out a asck, is a similar impulse the imposes that govern investing style. gay-rights, my younger son came out to me as gay in 1998 when he was 21 years some greatrtly after discussions, i became very funder of in being a gay-rights groups, helping out and helping in that room.
at the beginning, just running out checks, at the beginning, a purse went to agreement with my son, anonymously but over a. of time, it became overt and i and my team became quite these legacy gay-rights groups including democrats, hard-core democrats and we started working together on different projects, the -- it was aof that highly strategic and will is acute project, it was a partnership with the governor of new york with eisenhower, our gaycratic ends to make marriage legal in new york which
for golden state centers help and -- senator'sblican state help. >> what gives you pleasure outside of investing? >> i am a musician, a plate piano and keyboards. play piano and keyboards. i have been in a number of amateur bands. i play with musicians now. >> did you take lessons when you're young? when i was 10 years old and started becoming interested in playing rock and blues and honky-tonk piano when i was 11 years old. i have been in miggy bands and blues bands and rock bands. because a lot of fun
most of my family are musicians and so we have a family banned so we had a guitar player, a saxophone player, a drummer. >> what would you like to see as the headline of what you have accomplished in your life? he tried to make a difference, he protected a lot of people's capital over a long. of time. he was steady, reliable. >> a lot of people are not really happy, you seem like a happy person, would you say you are happy with what you have accomplished? do you mind if i lie down? done anyit have credible job building a business that i have admired. i want to think you for a great conversation and i would think everybody here for listening. ♪
>> it's been nearly six years since tim cook took over for cofounder, steve jobs. each year, the company becomes more cook-owned. unveiled the apple watch and apple music. largestd off the acquisition in apple's history, buying beats. environment, the philanthropy, equality and education. he stood up to president barack user privacy and maintains a dialogue with president trump despite their on climate change. now, as iphone sales plateau, at where temain